Will Bush Run With Lieberman's Plan?

Will Bush Run With Lieberman Proposal?

September 10, 1992|By DAVID LIGHTMAN; Washington Bureau Chief

WASHINGTON — For months, quarterback Joe Lieberman and his offensive line ground out the yardage for the small-business team.

Inch by inch, they gained ground. The Connecticut Democrat held hearings, hoping to get support for his plan to help businesses. He called press conferences. He got federal agencies, top lobbying groups and members of both political parties interested.

Wednesday, Sen. Lieberman and his allies learned that the president planned to snatch their ball today and throw the long bomb.

When Bush today gives what aides are calling a major economic address in Detroit, he is expected to embrace the small-business idea that Lieberman and others have been pushing for a year and a half.

So Lieberman, a strong supporter of Arkansas Gov. Bill Clinton, was darned if he was about to let Bush get credit for the touchdown.

He and Sen. Donald W. Riegle Jr., D-Mich., one of the Senate's more vocal Bush-bashers, quickly drew up statements reminding everyone that they had the idea first. Riegle was interested because the idea is patterned after a program tried in Michigan by former Gov. James Blanchard, a Democrat.

Lieberman offered colleagues a statement describing his plan Wednesday. Bush was not mentioned, though the senator did remind everyone that his bill had required "a year's worth of work."

He called his program "a new and innovative market-based approach to small business lending," one that will work "with a negligible amount of government resources and with no hidden governmental liability."

The program works like this:

Currently, the government will guarantee loans to small businesses on a loan-by-loan basis. If a business fails, the government must pay the lender roughly 85 to 90 percent of the loan.

Lieberman's approach would combine different loans. A special

reserve fund would be created to cover losses from these pooled loans. The state would control the fund, which would get its money from banks, businesses and the state and federal governments. Banks would guarantee less of the loan than they now do.

The advantage of the plan, supporters say, is that it would be easier for banks to lend money to businesses that were not high risks. The old system, which is considered more useful for high-risk businesses, would continue.

Lieberman and his colleagues have touted the plan as a simple way of easing the shortage of credit. But they have kept running up against the Bush administration.

When he wrote the Small Business Administration last year explaining his plan, Lieberman got a stiff letter back, saying the idea "deserves further consideration" but offering no commitment.

The senator kept pushing the idea, though, and building alliances. "We wrote to every regulator you can think of," said Ken Gluec, the senator's chief small-business aide.

They enlisted the support of the New England Council, the region's leading business group. And this spring, Lieberman announced a bipartisan group of co-sponsors that included Sens. Christopher J. Dodd, D-Conn., Ted Stevens, R-Alaska and Warren G. Rudman, R-N.H.

Still, they believe, the Bush administration stopped the Lieberman team for small gains at best.

"We look forward to further review of the proposal when specific legislation is introduced," William Taylor, chairman of the Federal Deposit Insurance Corp., wrote Lieberman April 1.

They also got nowhere with the Treasury Department. "We appreciate having the benefit of your views on this issue," wrote Mary C. Sophos, assistant secretary/legislative affairs, June 5. "Please let me know whenever we may be of service."

There things sat, until Bill Bonvillian, Lieberman's legislative director, sat at his desk Wednesday morning reading the Washington Post. On Page A16 was a paragraph quoting an unnamed Washington official as saying that one of Bush's "new ideas" was a plan "that helps provide capital under favorable conditions to smaller firms."

Bonvillian jumped. When Lieberman and Glueck arrived a few minutes later, Bonvillian leaped up and told them to come into his office. "Look at this!" he said.

"Gee," said the low-key Lieberman. "This looks familiar."

Later, he said, "I felt pretty good about its chance of passing."

Riegle's office was quickly on the phone, urging that something be done Wednesday. That led to the statements.

Republicans defended the president's timing, saying he just needed time to accept the idea. "It is a very reasonable approach," said Rep. Nancy L. Johnson, R-6th District, a Lieberman ally in trying to resolve the shortage of credit.

She said Bush had a program he believed would help the economy, but for whatever reason, businesses and consumers were not becoming confident and thus things were lagging.

Peter Meade, president of the New England Council, the region's leading business group, was diplomatic: "The more people in favor of this, the better."

And Lieberman, for one day at least, had kept the game under his control. In the end, he said, laughing, maybe he won after all.